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Pilgrim's Pride (PPC) Down 30.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Pilgrim's Pride (PPC - Free Report) . Shares have lost about 30.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Pilgrim's Pride due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Pilgrim's Pride Q4 Earnings Miss Estimates, Sales Up Y/Y

Pilgrim's Pride Corporation reported fourth-quarter 2019 results, with the top and the bottom line improving year over year. The upside can be attributed to improved performance in the United States, Mexico and European operations. However, earnings lagged the Zacks Consensus Estimate.

Q4 in Detail

Quarterly adjusted earnings of 14 cents per share surged 55.6% from the figure reported in the year-ago quarter. We believe that higher sales and margins supported the year-over-year upside. However, the bottom line lagged the Zacks Consensus Estimate of 22 cents. .

In the reported quarter, Pilgrim's Pride generated net sales of $3,063.5 million, up 15.3% year over year. Results were backed by higher sales in the United States, Mexico and European operations.

Revenues from the U.S. operations amounted to $1,904.5 million, up 4.6% year over year. The upside was driven by strong demand in case-ready and small bird operations. Results also benefited year over year from better conditions in the U.S. commodity market. Further, Prepared Foods segment improved in the quarter. Additionally, the company’s progress on its Key Customer Strategy is aiding growth.

Mexican operations generated revenues of $343.6 million in the reported quarter, up 6.9% year over year. Results gained from increased volume, which more than offset lower prices along with weak macro conditions in Mexico.

Revenues from European operations moved up 58.5% year over year to $815.4 million. The uptick was driven by the company’s efforts to mitigate input-cost challenges, investments in automation along with focus on improved yields. Robust operational efficiencies further aided the performance. Further, solid domestic demand and export for pork contributed to the upside.

Pilgrim's Pride’s overall cost of sales in the reported quarter increased 12.5% year over year to $2,862.1 million. Moreover, higher sales are likely to have driven gross profit, which rose 80.1% year over year to $201.4 million. Also, gross margin rose 2.4 percentage points to 6.6%.

Further, adjusted EBITDA was $161.6 million, up 45.6% year over year. Adjusted EBITDA margin of 5.3% reflected rise of 1.1 percentage points.

Other Financial Details

Pilgrim's Pride exited the quarter with cash and cash equivalents of approximately $260.6 million, long-term debt (less current maturities) of $2,276 million and total shareholders’ equity of $2,536.1 million. Further, the company generated $666.5 million as cash from operating activities for fifty-two weeks ended 29 December, 2019.

Growth Efforts on Track

The company is committed toward boosting operations through Key Customer strategy as well as augmenting capacities and capabilities. Pilgrim's Pride continues to engage in evolving the portfolio with product diversification, high-value products and margin expansion. Moreover, the company is committed toward continuous innovation of new products.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.


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